The near £700m deal is expected to create a £1bn broking giant once it completes, and with reinsurance and London specialties joining forces with a large regional presence, the newly formed business will have a number of strengths to bring to market

Howden’s acquisition of Top 50 rival A-Plan Group will create a new £1bn challenger broker for the UK market, says Hyperion Insurance Group chief executive David Howden.

Speaking to Insurance Times, Howden says the acquisition will give the broking group genuine scale in the marketplace and turn the business into a broking “powerhouse”.

“This deal creates one of the UK’s largest brokers,” he says. “I actually pulled out the Top 50 Brokers report from 2004 when we were 10 years old, and we just snuck in for the first time at number 48 with £14m of revenue. If you look at that today with the combined businesses, we are going to have £1bn of revenue, and that creates a sense of real scale in the UK market.”

And Howden says the complementary nature of the brokers’ books of business will give Howden the regional presence that it has been lacking to date.

“If you look at the two businesses we have built over the years, they have very similar cultures, but they are also highly complementary, and the reality is that, up until now, Howden hasn’t been a force in the regional marketplace,” he says. “A-Plan has some amazing regional structures, whereas Howden has that specialty and London market business, and that creates a real UK powerhouse.”

A-Plan chief executive Carl Shuker agrees, and says that he is excited by the potential presented by combining the different strengths of the two businesses. 

“The businesses are very complementary in terms of the markets they reach, and in terms of the distribution channels and the way we reach our clients,” he says. “So this is about growth and opportunity.

“It’s that scale that gives us firepower. Organic growth is the bedrock of our growth story, hitting 8-9% consistently year-on-year, but acquisitions are also really important.”

New Targets

Shuker said that this firepower, combined with A-Plan’s knowledge of the regional marketplace, will help the newly combined group hit new heights, as well as finding new acquisition targets.

“Our network of branches means we have real regional access to clients, but also to local brokers who may be looking to exit the market because of increasing regulatory complexity or because they are retiring,” he says. “So we are a great home for local brokers looking to sell their businesses to somebody who will still provides high quality advice and a local service for their clients, as opposed to the other consolidators who would probably take that business into a regional hub or into a contact centre.

“So tapping into the financial power of Howden and linking that into our regional presence will be a really important driver of growth in the business.”

Howden confirmed that the price paid for A-Plan was approaching the £700m mark, funded by a mixture of debt and equity.

A-Plan reported EBITDA of £45m in its latest set of accounts, and Howden says that he was attracted to the high growth that Shuker’s business had demonstrated, as well as the synergies that would benefit both businesses by combining their operations.

“It is not about the price you pay for the business, it’s about the value you create afterwards,” he says. “We are very confident that the combined businesses are going to be able to develop very, very rapidly, in terms of organic growth – and we already have market-leading organic growth.

“But in addition to that, we didn’t really have any ability to do transactions with any scale in the regions, so with Carl teaming up with us, we can now really be the home of choice for the UK market, and we see this as a stepping stone to us really developing.”

“We are in a fast consolidating market,” he adds, “and this positions us properly as a challenger broker.”

A Different Proposition

Howden was also keen to point out the cultural alignment of the two businesses, and says that this is something that differentiates them from the rest of the market.

“Both businesses have employee ownership at the heart of them,” he says. “Shuker has built his business over decades now, like I have, and that is based around a different DNA [to other brokers in the market] – the people working in the business are owners of the business, and we are very client focused.”

Shuker, meanwhile, was attracted to the Howden deal after seeking out more longer-term investment as the broker’s private equity backing started to come to an end.

“We’ve had private equity involved in our business since 2008, and Hg Capital – our current investors, have been massively supportive of our business and our plans,” Shuker says. “They were coming to the natural term of their investment, and I was looking for some longer-term investment capital.

“Someone suggested I speak to Howden, and from the moment we met there was an instant alignment in terms of values and cultures.”

Looking to the future, both men are united in their vision – M&A will continue to gather pace for the group, supported by organic growth that has often exceeded market averages.

Howden says that the group’s debt to EBITDA ratio will remain in the 4-5x bracket, even after the A-Plan deal complets, and is confident that the continuation of both brokers business models will continue to pay dividends, dispelling any thoughts of taking the group through an IPO.

“Floatation is not on the card for us, because the markets have changed,” Howden says. “If you look at what’s happened with the private market and the investments available, there isn’t any attraction for us to go private.

“We are very long-term [in our thinking] and we love this model of employee ownership.”


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